Stockpicking

It’s been a particular subject or pastime of the Lizard King over the years. Buoyed on by an early ’10  bagger’ I have repeatedly had a crack at trying to find ‘the next big thing. We’ve all seen Twiggy go from nothing to $20Bn in a few short years by having a crack, so why can’t we all do the same?

It seems like everyone’s doing it these days.

Everyone wants a piece of the action when a boom is on, a ticket in the lithium lottery. But of course, when the taxi drivers and the school mums are talking lithium stocks…well, that might be time to get out. But we’re not at that point yet, are we???

I’ve had my few good wins over the years (never enough, sadly), and there have been more than enough losses and near misses along the way.

There was the shell that I owned a few shares in at 5 cents that bought a gold project, and a few well-known ex-brokers joined the board. My rough appraisal was that it was a bad deal, and I sold all my shares at 8 cents each. That company was Bellevue Gold, which turned that gold project into a fantastic high-grade discovery; the rest is history.

I remember watching the announcement of Twiggy’s investment in the shell that became FMG, which happened to be a company we were watching at the time.

I remember thinking, “Blimey, Twiggy has 100 million options at 8c each. If he exercises the lot, he’ll have 100m shares!”. Of course, I never bought a share, which is now worth $160 each. That’s a 2,000-bagger, for goodness’ sake.

Please spare a thought for his sidekick, a geologist who helped Twiggy assemble the vast exploration application portfolio that became FMG. He was paid in shares for his consulting time, being $100K worth of shares at 8c each. He sold the lot at 40c a share to make a tidy profit of about $400K. Unfortunately for him, they’d be worth $200m today, and he’d be picking up about $20m a year in fully franked dividends!

I spoke to John Young of Pilbara Minerals fame the other day. He reminded me that Pilbara was on its knees in the early days and had done a capital raising at 1c each after buying into the Pilgangoora lithium project. Some competent brokers who took up the raising sold out at 1.3c. You can never complain about selling at a profit, but those shares are now worth over $5 each.

But every day is a school day, as they say, and we learn from our experiences. And every day brings with it a new opportunity – and now and then, a little gem pops up.

This time I think I’ve found a small company that has the potential to be the next big thing. Aurora Energy Metals, which listed mid-years (1AE) with a uranium and lithium project in Oregon, USA.

Aurora has a bit of history, having previously been listed with the project when it was a successful uranium explorer in 2010 with a market cap of over $100m. Then Fukushima ruined the uranium market for investors, explorers, and everyone.

It was de-listed, and the project was mothballed until early 2021. At this point, the board was alerted to a lake sediment lithium play happening around their project in the same McDermitt Caldera formation.

Jindalee was expanding its lithium resource, and Lithium Americas, a >$3.5bn US-listed company, was developing its Thacker Pass lithium project nearby.

Aurora’s project has a uranium deposit in the bedrock, with a lithium lake sediment deposit sitting on top. Aurora was able to re-assay old drill logs to confirm lithium in the shallower zones.

So Aurora went about re-listing the company, which came back on ASX with a market cap of $28m. This is at a time when uranium is on the rebound, domestic energy & critical metals demand in the  US is robust, and we have the best lithium market in history.

By the way, did I mention Aurora has one whoppingly significant resource topped with a lithium cherry for good measure?

Or is it the lithium opportunity with the bonus uranium steak knives?

Either way, it is seriously undervalued, sitting at 22c and a market cap of only $32m with $8m in cash. The company recently announced it had commenced lithium drilling – this can only be good given the lake sediments are more or less spread evenly as water in a lake would have been.

It is also finalising a uranium resource upgrade – again can only be good as they have previous drilling data that has not been added in. All their peers are trading at least 5-10x their market cap.

The issue is they had experienced delays in drilling approvals, and the recent market downturn prompted old investors who had been sitting o their shares whilst the company was de-listed, now decide to get out. So now, with booming lithium & uranium sectors and news to come out on both fronts, the stage is set—[Disclosure: I own shares in Aurora and intend to buy more!].

That’s all, folks; remember, you’ve got to be in it to win it. Happy punting!

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